Key Performance Indicators (KPIs) are an important way to verify that the work being performed by your organization is reaching certain goals and requirements. KPIs are tied directly to strategy, and oftentimes don’t need to be particularly confusing in order to be useful. Something as simple as “how satisfied are our customers with this release” can be considered a powerful KPI, though sometimes more minute measurements are needed:
KPIs can differ depending on strategy. They help an organization to measure progress towards their organizational goals, such as increased penetration of existing customers or markets, on-time delivery or reduced scope creep.
A KPI is part of a ‘SMART’ goal-one that is Specific, Measurable, Achievable, Relevant, and Time-based-which is made up of a direction, KPI, target and time frame. An example of this would be to “increase average revenue per sale to $10,000 by January.” In this case, ‘average revenue per sale’ is the KPI. The aforementioned goal wouldn’t be SMART if it wasn’t achievable, if the word ‘January’ was left out, or if was not relevant, e.g. if this was a portion of the organization that had nothing to do with sales or marketing, like HR
The article’s author, Curt Finch, lists a few simple KPIs that organizations should consider, including billability, adherence to estimates, and percentage of project profitable. It may seem like a simple calculation, but imagine what an impact would result from knowing that only 30% of projects made money, or that 98% were within SLAs.